Syriza and the other Europeans have not come to an agreement yet, but by now I am sure they agree on the following statements:

(i) there is no free lunch;

(ii) the Syriza “bargaining” might have been more successful had they simply declared early on that they are not taking any unilateral measures and they are fighting against austerity, which would have found many sympathetic listeners especially in the South (read Syriza’s scattergun on the Economist);

(iii) the applicable model here is not the Nash bargaining game but, instead, a repeated, dynamic, game;

(iv) the Greeks voted for change because they are fed up with austerity and they did not authorize taking Greece out of the Eurozone;

(v) Grexit and return to the drachma not only will be followed by eventual default on the Greek debt held in Euros mostly by Eurozone countries, due to the inevitable drachma devaluation, but it can also cause a domino effect.

In all, therefore, the Europeans don’t want Greece out of the Eurozone because they will make a negative return on their investment, and the Greeks don’t want to exit any way, and lose their allies. So what are the choices of Syriza? The possibilities are:

(a) bend over backwards (i.e., make a “kolotoumpa”; note that “anadiplosi” would be a better word in Greek) and follow on what the New Democracy and PASOK coalition was doing;

(b) return to the drachma hoping to deliver the promises made;

(c) call for a referendum and ask the people to vote between bending over backwards or exiting the Euro;

(d) blame the Germans and resign.

I believe Tsipras is a driven man of serious convictions fighting for a noble cause who would rather resign (d) than bend over backwards, which eliminates (a). Given statement (iv) above, he would rather call for a referendum (c) than do (b) without consulting with the Greek people, which will end up being extremely painful to them at least initially for several years despite Syriza’s utopian hopes. Choice (c) supercedes (a) and (b) anyway. Hence, we are left with the referendum (c) or the resignation (d). Assuming that the government wants to maximize the probability of staying in power, the referendum (c) appears as the likely outcome but I would not bet the farm on it. All bets are off, allowing for accidents too.